Antigua and Barbuda

The purpose of this Country Support Strategy is to provide a framework for EU assistance programmes in Antigua and Barbuda under the 10th EDF. It outlines the current status of relations between the EU and Antigua and Barbuda, sets out a detailed country diagnosis, summarises the Government’s development agenda, reviews the past and present EC cooperation and the activities of other major donors and concludes with the proposed EU response strategy and the corresponding indicative work programme.

Antigua and Barbuda gained political independence from the UK in 1981, inheriting a parliamentary system of government. A major political turnaround took place in 2004 when the opposition won elections, unseating the party that had held office for five consecutive terms since independence. Antigua and Barbuda is an upper middle-income country with a small open economy, an area of 442 sq km, a population of 80.100 (2006 estimate), a GDP of US$818 million and GDP per capita of US$10.213 (both figures in 2004 at current market prices). Its social indicators are relatively good. According to the 2007/2008 UNDP data, the country ranks 57th in the “High Human Development” category. However, Antigua and Barbuda’s economic base is very narrow, depending mostly on tourism for foreign exchange earnings, employment and revenue. Over the years, the Government has accumulated large fiscal deficits and debt repayment arrears, which have adversely affected the country’s creditworthiness and its ability to gain access to external funding for its Public-Sector Investment Programme. The Government that took office in 2004 has already introduced significant reforms, confirming its campaign pledge to return normality to fiscal and debt relations and to improve governance and transparency. Offshore financial services have been encouraged as a means of diversifying the economy. In the absence of any natural disaster or major external shock, the economy is expected to grow by 5% to 6% per annum over the medium term.

In addition to its development agenda, the Government wants to create a dynamic and efficient economy by strengthening its role in provision of social services, developing a closer relationship with the private sector and emphasising human resource development. Under the 7th, 8th and 9th EDF, EC aid has therefore been focusing on human resource development in line with Government policy to upgrade the country’s intellectual capital by means of a comprehensive reform of the education system. Antigua and Barbuda is one of the few Eastern Caribbean countries where the principal source of assistance has been from the EDF NIP which, given the size of the population and the per capita GDP, has been relatively modest. Nonetheless, the EC, with grants, and the CDB, with loans, are the only two significant donors active in the country.

The EC and the Government of Antigua and Barbuda propose to allocate 90% of the 10th EDF resources available under the A envelope to Fiscal and Public Sector modernisation as the single focal sector, which is also in line with the needs for implementation of the EPA. The resources will be used to support implementation of the fiscal and public-sector reforms necessary in Antigua and Barbuda, by enhancing the policy-making and technical capacity of the Ministry of Finance, and to support establishment of a National Productivity Council as a public-private partnership. There are no plans to use budget support given the limited funds available and the fact that the majority of the programme should be implemented in the form of technical assistance. The remaining 10% of the A envelope will be allocated to the Technical Cooperation Facility, notably to support non-State actors (NSAs) and to provide trade-related technical assistance.